The pace of digital transformation has accelerated over the past few years. This increased reliance on technology has impacted every corner of business, including accounts receivable (AR). 

As a result, many organizations are currently in a transitional period with their AR processes as they navigate a complex mix of physical and digital invoicing. This lack of cohesion adds business risk, increases human error and data-entry mistakes, and decreases workflow and process efficiency.

To combat process complexity and inefficiency, accounting leaders and document managers rely on several key performance indicators (KPIs) to track and monitor the health and effectiveness of their AR processes, including: 

  • Days sales outstanding (DSO): The average number of days it takes to collect payment from customers after a sale
  • Best possible DSO: The time it takes for on-time customers to pay invoices 
  • Average days delinquent (ADD): A measure of how effectively you are collecting on-time receivables
  • Accounts receivable turnover ratio (ART): A measure of how well you turn AR into cash over a specified time period
  • Collection effectiveness index (CEI): A measure of how effectively you collect outstanding payments within a specific time period
  • Deduction days outstanding (DDO): A measure of how well you resolve deductions
  • Deduction effectiveness index (DEI): A measure of how well you identify and recover incorrect deductions
  • Number of invoicing disputes: The number of invoice revisions or credits issued as a result of billing or process errors
  • Bad debt-to-sales ratio: The percentage of bad debt impacting your annual sales

Organizations that track and manage their AR KPIs manually aren’t realizing the full benefit and value these KPIs can provide. Manual performance tracking is complicated and time-consuming, which wastes money, ties up cash flow, and reduces productivity. 

Making the switch from manual AR document processes to an electronic document management system (EDMS) will save time, reduce complexity, and free up accounting resources to work on other high-value tasks.

Supercharge KPI Efficiency with an Electronic Document Management System 

Organizations that track and manage their AR KPIs manually aren’t realizing the full benefit and value these KPIs can provide. Manual performance tracking is complicated and time-consuming, which wastes money, ties up cash flow, and reduces productivity. 

Making the switch from manual AR document processes to an electronic document management system (EDMS) will save time, reduce complexity, and free up accounting resources to work on other high-value tasks.

Here are five ways digitalizing the document management process can help you improve your KPIs and turn data into actionable insights that improve business outcomes:

Automate Repetitive Tasks

AR is rife with time-consuming, mundane manual processes. Employees spend countless hours hunting down documents, creating invoices then reconciling those invoices, tracking down late bills, and the list goes on. 

An electronic document management system can take on much of the burden of these repetitive tasks, using deep learning algorithms to streamline AR and help increase on-time payments and free up cash.

Reduce Errors

When people manually enter data, mistakes are going to happen. These errors invariably lead to reduced cash flow, costly rework, inaccurate data, and dissatisfied customers. 

An EDMS reduces the risk of human error by automating many AR processes and data entry tasks. This helps ensure invoicing and payment processing is accurate, which reduces the number of late payments.

Improve Cash Flow

Inaccurate customer data, delayed invoicing, and late payments are just a few factors that negatively impact cash flow. Cash flow issues can have a significant impact throughout the business, including time and money spent collecting overdue invoices and tying up income needed to pay your company’s own vendors.

Implementing an EDMS eliminates many of the most common causes of late payments, such as accounting errors and manual data entry, which increases cash flow and improves KPIs.

Drive Data Extraction and Indexing with AI

Your data isn’t valuable if it’s not useful, and it’s not useful if you can’t find it. If your business still relies on paper-based AR processes, you aren’t getting the full value from your data. 

Selecting an EDMS that provides AI-driven data extraction and indexing capabilities ensures all of your critical data—even the data that’s scanned in—is extracted and accurately indexed within the system so it is easy to find, access, and analyze. 

Increase Security and Compliance

Business users need to easily access the data they need, but it’s also important to protect sensitive personal and company-critical information from unauthorized access and loss.

Digitalizing document management allows admins to control access, track chain of custody, and set up retention and disposition policies that keep data secure and in compliance. 

Digitize AR Processes for Optimal KPI Impact

Legacy document management processes and technology can’t keep pace with today’s rapid-fire, data-driven business environments. Maintaining a competitive edge in the market depends on your ability to recognize when a business process isn’t working and pivot fast.    

Implementing an electronic document management system that fully digitizes your AR processes and documents will streamline and optimize the essential activities that drive your KPIs, including payment collection, invoicing, deductions, and issue resolution.

Contact us to learn how Ripcord is helping businesses optimize their document management systems to excel in a digital world.